While some consider the DXY event a temporary show of strength, its impact on crypto markets was clear.
Traders can borrow Tether to open a leveraged long position, whereas Bitcoin borrowers can only short the cryptocurrency because they are betting on its price declining.
Crypto traders are usually bullish, so a margin lending ratio below 3 is deemed unfavorable.
The top traders’ long-to-short net ratio excludes externalities that might have impacted the longer-term futures instruments.
Excluding a brief spike in OKX’s Bitcoin long-to-short ratio on April 6, professional traders have slightly reduced their long positions since March 31.
So what could be the cause of the distortion? The most likely factor is the fact that Bitcoin’s price has been down 32% in 12 months.
It’s possible to have a “glass half full” reading from the same data because Bitcoin price dropped 15% since March 29, and yet, there is no sign of bearishness from the margin and BTC futures trading.